As the last month of 2020 stars, it's time to look ahead in the world of Bitcoin investment and cryptocurrencies. Right now, crypto markets are on fire, and BTC hits an all-time high, Ethereum keeps rising, and altcoins, in general, are all on an upward trend.
The crypto market will start on a high note in 2021, so it is essential to look ahead even at this early date. There are many considerations to consider when deciding between an investment strategy based on Bitcoin or altcoins.
These can be profitability, market volatility, competition, ease of purchase, and time scale.
In this article, we'll look at both scenarios, Bitcoin investing or altcoin investing, and give some pointers as to which path will be more profitable in 2021. So you can start next year with a leg ahead.
Recommended: [Read how and when to invest in Bitcoin]. (https://remitano.com/forum/post/4766-when-and-how-to-invest-in-bitcoin)
Bitcoin is back in the news and the imaginations of the general public. This is because it has broken through its previous all-time high, and it keeps growing in price by the day. It seems it will end up strong at the close of 2020, but does that mean it is a good investment.
First of all, we need to see the current market conditions to make such a determination. Right now, there is a general sense of economic optimism in the world, as it seems that vaccines for COVID-19 will be ready by January 2021.
The possible end of the global pandemic with the introduction of an effective cure for the disease is generating a general push in the markets. This is also pushing Bitcoin investing as more people enter the BTC market.
The new wave of adoption is helped by big players entering the crypto world such as PayPal, allowing people to buy Bitcoin and other cryptocurrencies from their accounts. Also, Visa has launched a USDC and BTC rewards card that is expanding the adoption of stable coins and Bitcoin investment in the general public. Both bullish news for the crypto markets.
Finally, the end of the health crisis still leaves the financial ramifications of the pandemic. Governments around the world will have to make substantial cash injections to their economies. This will increase the money supply significantly in countries and international markets.
As the money supply goes up, every asset class will increase in price as money pours into them to seek gains. Bitcoin investing will be among the world's greatest assets, as the limited supply of BTC guarantees no one will create more and dilute its value.
So, the trends for Bitcoin investing for the first quarter of 2021 are looking positive. All seems to be aligning for BTC to break new records in the year to come. Yet, looking at the other side.
If we look at the market dominance of BTC, we see it has remained on a downwards trend:
Despite the major increases in prices, Bitcoin has not regained its dominance over the crypto market. It is still more than half of the market, but the downward trend continues and won't reverse.
The reason is that along with Bitcoin; altcoins are also growing in price and adoption. They are now viable investments that do not have to be correlated to BTC to grow in price. They have stepped out of the shadow of the first cryptocurrency and now are assets in their own right.
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An altcoin is any other cryptocurrency that is not Bitcoin. Not a very technical definition, but it has become an everyday word for crypto users, and it remains a valid category. There are many altcoins globally; currently, Coin Market Cap has more than 7,000 assets listed on their site.
This saturated market makes it challenging to choose one coin over another since there are so many that it is hard to find which are valuable.
So, why go through the trouble?
Well, the people who got to be millionaires with Bitcoin investing bought when BTC was below a dollar, or even when it was worth a few dollars. They could buy thousands or tens of thousands of coins before the price shot up and multiplied their holding by many factors of magnitude.
Right now, this is no longer possible with Bitcoin. Only in the world of altcoins, an investor has the chance to multiply his/her portfolio 10x, 100x, or more. This is why the altcoin market is essential and worth following.
Recommended: Read about the top altcoins to invest in 2020.
All of the same market conditions propping up Bitcoin also factor into altcoins. Of course, this leaves open the question of the best coins to invest right now ahead of the 2021 season. So, here are some ideas on which projects to follow:
Ether is clearly the second choice of any investor in the market though it is very different from Bitcoin.
It is not only the second-largest cryptocurrency by total market capitalization. Also is the most used blockchain in the world. It represents on its own the other half of the cryptocurrency market. As seen in the Ethereum dominance chart:
And like with BTC, Ether is on the rise. The beacon chain of Ethereum 2.0 launched successfully at the start of December 2020.
The first stages of the general update of Ethereum have gone through without major problems, and all seems to be on course for the Proof of State (PoS) change.
Of course, right now, Ether's price is above 600 USD, so many of the same problems that affect Bitcoin investing are also through for Ethereum. Unless you already have access to vast amounts of cash, Ethereum won't give you a big win.
So, we must look to great coins that are below the one-dollar price.
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Algorand is a 3rd generation blockchain created by an MIT professor. It can process up to 10,000 transactions per second and is fully capable of running smart contracts like Ethereum.
It is attracting the attention of developers and investors alike, and the price could soon grow exponentially.\
The ALGO coin right now sits at around 35 cents of a US dollar.
This makes it an excellent replacement for Bitcoin investing; with only a few dollars, a person can accumulate much more ALGO and get more enormous profits than if he/she had bought BTC with the same amount of money.
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Another 3rd generation blockchain, Ergo, is going against convention and implementing a new Proof of Work (PoW) algorithm for its blockchain.
The project can also host smart contracts written in a functional programming language that should make verifying security cheaper and faster.
The ERG coin is right now below 40 cents. It is a significant investment when we consider that Ergo has partnered with Cardano to bring Oracle Pools* into the crypto economy. Both blockchains are working together to develop this technology.
Recommended: Read about the new altcoins supported on Remitano.
Icon in a blockchain from South Korea that focuses on interoperability. Its primary focus is to create bridges between different blockchains to allow for the easy trade of assets hosted in different networks.
South Korean educational institutions are also using it to verify university degrees.
The ICX coin is somewhere around 40 cents. This type of project's potential as blockchains multiply is huge since these networks will need points of connection between them to be successful.
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Another 3rd generation blockchain with an active network since 2019. It is notable because it has already implemented sharding, so side chains live in their network. It makes it far more scalable than Ethereum, and thus more straightforward and cheaper to use.
The ZIL coin is perhaps the cheapest from the list. Yet, it has enormous potential as the transactions per second of Zilliqa are orders of magnitude higher than Ethereum. It is worth keeping an eye on this project during 2021.
The choice between Bitcoin investing and altcoin investing is not a binary one. The optimal strategy combines both types of assets for a more stable and diversified portfolio. Bitcoin will continue delivering high returns in 2021. But it is too expensive for most people out there.
Altcoins, on the other hand, are perfect for higher returns at an increased risk. Many are the projects ready to explode in this space, and we have listed only a few. Need help investing in Altcoins?
Check out our support guide on how to do it right.
